Pyper v. Bond

2011 UT 45, 258 P.3d 575, 687 Utah Adv. Rep. 58, 2011 Utah LEXIS 97, 2011 WL 3241459

• Court: Utah Supreme Court
• Decided: July 29, 2011
• Docket: 20091025
• Status: Published

Opinions

Associate Chief Justice DURRANT,

opinion of the Court:

INTRODUCTION

11 We granted certiorari in this case to determine whether the court of appeals erred in its construction and application of the standard for setting aside a sheriff's sale. To resolve this question, we must address two distinct issues. First, we must decide whether the court of appeals erred in concluding that gross inadequacy of price together with slight cireumstances of unfairness may justify setting aside a sheriff's sale. Second, if we agree with the court of appeals' construction of the standard for setting aside a sheriff's sale, we must determine whether the court of appeals erred in holding that the facts in this case involved slight cireum-stances of unfairness.

12 We hold that the court of appeals did not err in concluding that gross inadequacy of price together with slight cireumstances of unfairness may justify setting aside a sheriff's sale. This is because a showing of both gross inadequacy of price and slight cireum-stances of unfairness gives rise to a presumption of fraud, which, unless rebutted, may constitute a compelling cireumstance that justifies setting aside a sheriff's sale We further hold that the court of appeals did not err in affirming the district court's conclusion that the Appellant's conduct created, at least, slight circumstances of unfairness. We therefore affirm the court of appeals' decision.

BACKGROUND

T3 In 2002, David Pyper hired Justin Bond, an attorney, to represent him in a probate matter. At the time, Mr. Bond was employed by the law firm of Dorius, Bond, Reyes, and Linares (the Law Firm or the Firm). The Law Firm charged Mr. Pyper $9,064.82 in attorney fees for Mr. Bond's representation of Mr. Pyper. Despite several requests by the Firm, Mr. Pyper failed to pay these fees.

{4 The Law Firm subsequently sued Mr. Pyper in an effort to obtain payment of the attorney fees. In 2006, the district court entered a judgment in the Law Firm's favor in the amount of $10,577.23. To satisfy this judgment, Mr. Bond filed a lien against a house owned by Mr. Pyper. At the time the lien was filed, the house had an estimated value of approximately $125,000.

T5 In November 2006, a properly noticed sheriff's sale was held at which Mr. Pyper's home was auctioned. Mr. Bond was the only bidder at the sale. Mr. Bond purchased Mr. Pyper's home with a bid of $329.

1 6 On April 20, 2007, Mr. Pyper called the Law Firm and expressed his desire to redeem his property. During the phone call, Mr. Pyper asked the Firm to provide him with a judgment lien payoff amount. An employee of the Firm told Mr. Pyper that an attorney would return his call, but no one contacted Mr. Pyper.

17 On April 25, Mr. Pyper called the Law Firm again and spoke with Dale Dorius, an attorney at the Firm. During this conversation, Mr. Pyper told Mr. Dorius that he wanted to satisfy the judgment against him and offered to pay $8,500 to do so. Mr. Dorius stated that he needed to talk to Mr. Bond about the offer, but no one at the Firm ever contacted Mr. Pyper with an answer. After his conversation with Mr. Dorius, Mr. Pyper called the Law Firm every day for the next twenty-eight days but was unable to speak with Mr. Bond or Mr. Dorius.

18 On or about May 8, 2007, the 180-day period in which a debtor may redeem property sold at a sheriff's sale expired. Shortly thereafter, the deed to Mr. Pyper's home was transferred to Mr. Bond. On May 17, 2007, Mr. Pyper spoke with Mr. Bond about satisfying the judgment against him and informed Mr. Bond that he had the money to do so. Mr. Bond told Mr. Pyper that he needed to speak with Mr. Dorius about the issue and that he would call Mr. Pyper back. No one returned Mr. Pyper's call. Mr. Pyper continued calling Mr. Bond and Mr. Dorius on a near-daily basis for the next two weeks.

19 On May 30, 2007, an attorney representing Mr. Pyper contacted Mr. Dortus and requested a payoff amount. Mr. Dorius promised Mr. Pyper's attorney that he would get back to him with an amount by the end of the week, but Mr. Dorius did not do so. After approximately two more weeks of unanswered phone calls, Mr. Pyper's attorney sent Mr. Dorius a letter regarding Mr. Py-per's desire to satisfy the judgment against him and to redeem his property. An attorney representing the Law Firm responded to the letter and informed Mr. Pyper that his redemption period had expired.

110 After learning that the redemption period had expired, Mr. Pyper filed a petition in the district court seeking to set aside the sheriff's sale of his property. In June 2008, the district court held a hearing on the petition, during which Mr. Bond, Mr. Dorius, and Mr. Pyper testified. Sometime after the hearing, the district court issued a memorandum decision in which it concluded that the sale price of Mr. Bond's property was so "grossly inadequate" as to "shock{ ] the conscience of an impartial mind." The district court also concluded that Mr. Bond and Mr. Dorius's conduct amounted to at least "slight circumstances of unfairness" to Mr. Pyper. Based on these conclusions, the district court set aside the sheriffs sale of Mr. Pyper's property.

"[ 11 Mr. Bond and Mr. Dorius (collectively, the Appellants) timely appealed the district court's decision to the Utah Court of Appeals. ¹ The court of appeals affirmed the district court's decision to set aside the sheriffs sale.² In so doing, the court of appeals noted that it agreed with the district court's conclusion that the facts of the case involved both gross inadequacy of price and, at least, slight cireumstances of unfairness.³ Specifically, the court of appeals concluded that the Appellants' "words and actions represented, at least implicitly, that they were going to participate in the redemption process" and that it was "their failure to act in accordance with this representation that justified] the district court's finding of unfairness warranting relief"⁴ Finally, the court of appeals explained that the district court's findings of both great inadequacy of price and slight cireumstances of unfairness had "vest[ed] the district court with the authority to set aside the [sheriffs] sale [of Mr. Pyper's property] under prior precedents." ⁵

[ 12 Mr. Bond and Mr. Doritus then filed a petition for certiorari, which we granted. On certiorari, Mr. Bond and Mr. Dorius argue that the court of appeals' decision should be reversed because it conflicts with this court's precedent concerning the standard for setting aside a sheriff's sale. We have jurisdiction to hear this appeal pursuant to section 78A-3-102(8)(a) of the Utah Code.

STANDARD OF REVIEW

T18 "On certiorari, we review the decision of the court of appeals for correctness, giving no deference to its conclusions of law." ⁶

ANALYSIS

I. THE COURT OF APPEALS DID NOT ERR IN ITS CONSTRUCTION OF THE STANDARD FOR SETTING ASIDE A SHERIFF'S SALE

114 The right of redemption from a sheriff's sale is a statutory right provided in section 78B-6-906 of the Utah Code.⁷ That section states that "[slales of real estate under judgments of foreclosure of mortgages and liens are subject to redemption." ⁸ The procedures for exercising the right to redemption are set out in rule 69C of the Utah Rules of Civil Procedure.⁹ In relevant part, this rule provides that a person seeking to redeem property sold through a sheriff's sale must pay the amount of the bid within siz months after the sale.¹⁰

115 In most instances, "strict compliance with the six-month redemption period is ... required." ¹¹ But in some cireumstances "a court sitting-in equity may extend a redemption period or set aside a sheriff's sale after the period for redemption" has expired. ¹² For instance, we have indicated that a court may set aside a sheriff's sale where (1) a debtor's property is sold at a grossly inadequate price and (2) there were irregularities during the sale that contributed to the inadequacy of price or cireumstances of unfairness during the redemption period caused by the conduct of the party benefitted by the sale.¹³ These factors operate on a sliding seale. Thus, the greater the dispro-portionality in price, the less unfairness or fewer irregularities a party must demonstrate before a court may justifiably extend a redemption period or set aside a sheriff's sale.¹⁴

$16 For example, in Young v. Schroeder, the Supreme Court for the Territory of Utah noted that "'[gJreat inadequacy {fof price] requires only slight cireumstances of unfairness in the conduct of the party bene-fitted by the sale to raise [a] presumption of fraud" and to justify setting aside a sale.¹⁵ Similarly, in Pender v. Dowse, we noted that "(lt is well settled that equity will intervene and set aside an execution sale or cancel a sheriff's deed, after the redemption period has expired, where it appears [that] the consideration was grossly inadequate and the sale was attended by unfairness and fraud.¹⁶ In Pender, we also reiterated that "great inadequacy [of price] requires only slight cireumstances of unfairness in the conduct of the party benefitted by the sale to raise the presumption of fraud.¹⁷

$17 We revisited the standard for setting aside a sheriff's sale in Huston v. Lewis.¹⁸ In Huston, we reaffirmed our prior opinions, stating that "a court sitting in equity may extend a redemption period or set aside a sheriffs sale after the period for redemption.¹⁹ We noted, however, that "a court should take such an action only when the equities of the case are compelling and move the conscience of the court.²⁰

{18 In the instant case, the Appellants argue that the court of appeals erred in two respects in concluding that the district court's findings of "both great inadequacy of the sales price and slight cireumstances of unfairness ... served to vest the district court with the authority to set aside the sale.²¹ First, they contend that this court created a "new" and "heightened" standard for setting aside a sheriff's sale in Huston. Second, they argue that because this "new" standard requires "compelling" civreum-stances, it is no longer sufficient to demonstrate great inadequacy of price and slight cireumstances of unfairness. Instead, they claim that a party must now demonstrate great inadequacy of price and substantial unfairness. We are not persuaded.

119 As an initial matter, we disagree with the Appellants' contention that our statement in Fustorn-that "a court should [set aside a sheriffs sale] only when the equities of the case are compelling and move the conscience of the court ²² a "new" or "higher" standard for setting aside a sheriff's sale in Utah. Rather than creating a new standard, our statement in Huston merely synthesized and articulated the standard that we have consistently applied in our cases in the sheriff's sale context.²³ In other words, our review of our precedent concerning sheriff's sales indicates that this court has always required that a party demonstrate a compelling circumstance that "moves the conscience of the court" before a district court is vested with equitable authority to extend a redemption period or set aside a sheriffs sale.²⁴ In fact, we supported our statement in Huston by citing directly to early cases in the sheriff's sale context, including Young, which was decided in 1894,²⁵ Thus, to the extent that there is any ambiguity, we clarify that our statement in Huston was simply intended to emphasize the limited cireumstances in which a court should exercise its equitable authority to set aside a sheriff's sale and that it was not intended to create a new or heightened standard.

4 20 We also disagree with the Appellants' argument that a showing of gross inadequacy of price together with slight cireamstances of unfairness is not sufficient to set aside a sheriff's sale. As noted above, we have consistently stated that "great inadequacy [of price] requires only slight cireumstances of unfairness in the conduct of the party bene-fitted by the sale to raise the presumption of fraud.²⁶ ** And we now clarify that, unless the presumption is rebutted, a court may justifiably find that a showing of gross inadequacy of price together with slight cireum-stances of unfairness constitutes a compelling cireumstance that justifies setting aside a sheriff's sale.²⁷

1 21 In sum, we conclude that the court of appeals' statement-that gross inadequacy of price and slight cireumstances of unfairness justify setting aside a sheriff's sale-does not conflict with the "compelling cireumstance" standard articulated in Huston. We therefore hold that the court of appeals did not err in its construction of the standard for setting aside a sheriff's sale.

II. THE COURT OF APPEALS DID NOT ERR IN AFFIRMING THE DISTRICT COURTS CONCLUSION THAT THE APPELLANTS' CONDUCT AMOUNTED TO, AT LEAST, SLIGHT CIRCUMSTANCES OF UNFAIRNESS

122 Having concluded that the court of appeals did not err in its construction of the standard for setting aside a sheriff's sale, we must now determine whether the court of appeals erred in affirming the district court's conclusion that the facts of this case involved, at least, slight circumstances of unfairness.

123 As explained above, a district court may extend a redemption period or set aside a sheriff's sale where (1) a debtor's property is sold at a grossly inadequate price and (2) there are slight cireumstances of unfairness during the redemption period caused by conduct of the party benefitted by the sale. Although the Appellants concede that Mr. Pyper's property was sold at a grossly inadequate price, they argue that the court of appeals erred in affirming the district court's conclusion that the facts of this case involved, at least, slight cireumstances of unfairness.²⁸ We disagree.

T24 We have previously explained that a district court has a high degree of discretion in determining whether the facts of a case justify extending a redemption period or setting aside a sheriffs sale after the expiration of the redemption period.²⁹ We have therefore indicated that a district court's decision to set aside a sheriff's sale is to be reviewed "for an abuse of ... discretion.³⁰ Under this standard of review, to reverse the trial court's conclusion that the facts of this case involved slight cireum-stances of unfairness, the court of appeals would have been required to find that, "given the applicable law and facts, the trial court's decision [was] unreasonable." ³¹

25 In its findings of fact, the trial court found that Mr. Pyper had called the Law Firm approximately one month prior to the expiration of the redemption period. During this phone call, Mr. Pyper expressed his desire to pay off the judgment against him and was told by an employee of the Firm that an attorney would call him back. The trial court also found that Mr. Pyper had a telephone conversation with Mr. Dorius approximately one week later. During this conversation, Mr. Pyper again expressed his desire to satisfy the judgment against him and offered to pay Mr. Dorius $8,500 to do so. Mr. Dorius informed Mr. Pyper that he needed to discuss the offer with Mr. Bond, but Mr. Dorius never followed up with Mr. Pyper.

126 After reviewing these findings, the court of appeals concluded that Mr. Dorius's words and actions during his phone call with Mr. Pyper "represented, at least implicitly, that [the Appellants] were going to participate in the redemption process.³² The court of appeals also explained that it was the Appellants' "failure to act in accordance with this representation that justified] the district court's finding of unfairness warranting relief,³³ Although we do not agree that the Appellants' conduct represented an implicit willingness to participate in the redemption process, we do believe that their conduct indicated a willingness to negotiate a settlement of the judgment against Mr. Py-per. As a result of this conduct, Mr. Pyper may have reasonably believed that he could resolve the dispute with the Law Firm and reacquire his property through negotiation, and that it was therefore unnecessary for him to utilize the redemption process. Thus, although we acknowledge that this is a close case, we conclude that the Appellants' failure to act in accordance with this representation amounted to, at least, slight cireumstances of unfairness. We therefore hold that the court of appeals did not err in affirming the district court's conclusion that the facts of this case involved, at least, slight circumstances of unfairness.

CONCLUSION

« 27 We hold that the court of appeals did not err in concluding that gross inadequacy in price together with slight cireumstances of unfairness may justify setting aside a sheriffs sale. We also hold that the court of appeals did not err in affirming the district court's conclusion that the Appellants' conduct amounted to, at least, slight cireum-stances of unfairness. We therefore affirm the court of appeals' decision.

T28 Chief Justice DURHAM and Justice PARRISH concur in Associate Chief Justice DURRANT's opinion.

1 . See Pyper v. Bond, 2009 UT App 331, 224 P.3d 713. ,

2 . Id.120.

3 . Id.116.

4 . Id. 118 (emphases added).

5 . Id. "420.

6 . State v. White, 2011 UT 21, ¶ 14, 251 P.3d 820.

7 . Urag Cope Amn. § 78B-6-906 (2008).

8 . Id. § 73B-6-906(1).

9 . See Urag R. Civ. P. 69C. We note that the Utah Rules of Civil Procedure were enacted by this court and not by the Utah Legislature.

10 . See id.

11 . Huston v. Lewis, 818 P.2d 531, 535 .(Utah 1991).

12 . Id.

13 . See, e.g., Pender v. Dowse, 1 Utah 2d 283, 265 P.2d 644, 647-48 (1954); First Nat'l Bank v. Haymond, 89 Utah 151, 57 P.2d 1401, 1405 (1936) ("It is quite generally held that substantial inadequacy of price, coupled with fraud, mistake, or other unfair dealing is sufficient to justify a court of equity upon timely motion to set aside the sale and order a resale."); Young v. Schroeder, 10 Utah 155, 37 P. 252, 254 (Utah Terr.1894); see also Charles C. Marvel, Annotation, Inadequacy of Price as Basis for Setting Aside Execution or Sheriff's Sale, 5 ALRAth 794 (2011) ("Although it is infrequently held that a grossly inadequate price in itself justifies setting aside an execution sale, virtually all courts recognize that inadequacy of price, in some degree, combined with some form of other circumstances, especially those indicative of fraud or unfairness on the part of the purchaser, or mistake, does justify the setting aside of an execution sale, or, as it sometimes happens, justifies allowing late redemption of the property."). We have also recognized other circumstances that may justify setting aside a sheriff's sale such as "fraud, accident, mistake, or waiver." J.A. Mollerup v. Storage Sys. Int'l, 569 P.2d 1122, 1124 (Utah 1977).

14 . See, e.g., Pender, 265 P.2d at 647-48; Young, 37 P. at 254; see also Marvel, supra note 13, at 794 ("[Clases from numerous jurisdictions have contained statements [that] ... a court is justified [in setting aside a sheriff's sale] where the gross inadequacy of price is accompanied by slight circumstances indicative of unfairness, or where the sale is affected by slight irregularities." (internal quotation marks omitted)).

15 . 37 P. at 254 (emphasis added) (quoting Graffam v. Burgess, 117 U.S. 180, 192, 6 S.Ct. 686, 29 L.Ed. 839 (1886).

16 . 265 P.2d at 647.

17 . Id. at 648 (internal quotation marks omitted).

18 . 818 P.2d 531 (Utah 1991).

19 . Id. at 535 (footnote omitted).

20 . Id. (emphasis added) (internal quotation marks omitted).

21 . Pyper v. Bond, 2009 UT App 331, ¶ 20, 224 P.3d 713.

22 . 818 P.2d at 535 (emphasis added) (internal quotation marks omitted).

23 . See, eg. id.

24 . See Pender, 265 P.2d at 648.

25 . See Huston, 818 P.2d at 535-36.

26 . See, e.g., Pender, 265 P.2d at 647-48 (emphasis added) (internal quotation marks omitted). Courts in other jurisdictions have also consistently recognized that gross inadequacy of price and slight circumstances of unfairness create a presumption of fraud. See, e.g., Milner v. Denman, 21 Ill.2d 182, 171 N.E.2d 654, 657 (1961) ("It is well settled in this State that gross inadequacy of price is not of itself sufficient to set aside a judicial sale, yet when such inadequacy is shown, coupled with slight circumstances indicating unfairness or fraud, either upon the part of the officer, the purchaser or the party to the record benefitted by the sale, it will be sufficient for equitable intervention." (internal quotation marks omitted)); McCartney v. Frost, 282 Md. 631, 386 A.2d 784, 788 (1978) ("Although the cases and the authorities indicate that a sale will not be set aside for mere inadequateness of price, they state that if the sale is so grossly inadequate as to shock the conscience of the court, or if there be but slight circumstances of unfairness in addition to great inadequateness of price, a sale will be set aside.").

27 . See, e.g., Pender, 265 P.2d at 648; Young, 37 P. at 254; see also Haymond, 57 P.2d at 1404 ("[WThile ordinarily confirmation of [a sheriff's] sale will not be refused because of mere inadequacy of price, slight circumstances in addition thereto or gross inadequacy of price sufficient to shock [a] court's conscience justifies refusal to confirm." (internal quotation marks omitted)).

28 . The Appellants also argue that the court of appeals erred in concluding that "even a lack of affirmative actions on the part of the purchaser can constitute slight circumstances of unfairness." Contrary to the Appellants' claims, however, we find no such conclusion in the court of appeals' opinion. Additionally, our review of the court of appeals' opinion suggests that it did find that Mr. Dorius had engaged in affirmative conduct-discussing a payoff amount with Mr. Pyper and stating that he needed to review Mr. Pyper's offer with Mr. Bond. Because the facts of this case involve some degree of affirmative conduct, we express no opinion on whether a court would be justified in finding unfairness in a case not involving affirmative conduct.

29 . See Huston v. Lewis, 818 P.2d 531, 534 (Utah 1991).

30 . Id.; see also Mack v. Utah State Dep't of Commerce, 2009 UT 47, ¶ 22, 221 P.3d 194 ("We review a grant of equitable relief for an abuse of discretion."). The court of appeals appears to have reviewed the district court's decision for correctness, a more rigorous standard of review than the abuse of discretion standard. By affirming the district court's decision under a correctness standard of review, however, the court of appeals implicitly found that the district court had not abused its discretion.

31 . Huston, 818 P.2d at 534.

32 . Pyper v. Bond, 2009 UT App 331, ¶ 18, 224 P.3d 713.

³³